Work detail

Okun’s Law and Social Expenditure

Author: Mgr. Marta Batíková
Year: 2021 - summer
Leaders: Mgr. Luboš Hanus
Consultants:
Work type: Finance, Financial Markets and Banking
Masters
Language: English
Pages: 96
Awards and prizes:
Link:
Abstract: This thesis analyses Okun’s law and its cross-country differences based on social
expenditures. To estimate the law in time, Nadaraya-Watson kernel estimation is
employed, which has not been applied to Okun’s law in any previous study. Thus, to
assess the robustness of the model, the statistical testing of hypotheses is used to
evaluate the time-varying coefficients.
The analysis is executed on OECD countries between 1995 and 2019, and the results
are mainly in line with the previous literature. Periods with higher GDP growth and lower
unemployment rates, on average, tend to have higher Okun’s coefficients. Moreover,
cross-country comparison reports the tendency of countries with, on average lower
unemployment spending and higher GDP per capita to exhibit higher Okun’s
coefficients.

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